Investment Strategies for Precious Metals – Your Guide to Just Starting Out

Below is a guest post thanks to the team at WallStreetSubscriptions.com. For more information about the article’s writers, see the excerpt below:

So you have decided to go ahead and finally make that jump to financial independence, jacking in your old job, waving goodbye to your work colleagues, and leaping into what could be the unknown.  If your chosen route is to get involved in stocks, shares, and investing, then there’s one niche market that deserves your attention – but is not one for the weak of heart or someone who has small investment amounts.

I am talking about the investment in certain precious metals.  For example, investing in gold or silver and platinum is not the same as investing in stocks and should be treated entirely differently.  But how do you decide which is the best type of investment to buy and have a strategy in? Here are some options to help you decide the best approach to suit you and your wallet.

Are You a Short Term or Long Term Trader?

The first question you need to ask yourself before embarking on this potentially valuable journey, is whether you are going to invest for the long term, or whether you want to only do this over a short term period of trading? There really is a very large difference, and the way you go about approaching this will determine what your next steps will be (of which I recommend two):

  1. Use a standard fundamental approach
  2. Use a more technical analysis approach

You will need to be aware of the risks associated with both investment strategies – if you do this properly then you are going to be ahead of the game and will set yourself up to have a higher chance of success and profits.

How Much Capital Are You Prepared to Invest?

The next thing you need to decide is how much capital you are prepared to invest in this venture, or more to the point, how much of a risk you are comfortable in taking?  Once you have made up your mind, then you need to start getting serious – this is what you do next:

  1. Discover your investment prospects – are they bearish, bullish, or neutral?
  2. What specific asset do you want to mainly focus on – stocks, options, or futures products only?
  3. When are you finally going to start to trade – understand what technical indicators you need.
  4. How long are you prepared to stick to your position – do you set a price when you need to leave or do you stop when making a los, or continue until you have exhausted all profits?

Try Out Different Investment Strategies – But Not All at Once!

One of the best ways in which to learn a particular new trading strategy is to try it out for just a while, as you learn the ups and downs are going to be.  Investment newsletters are great at showing you what works and what doesn’t – personally I use the suite of investment newsletters that are available from MarketWatch.

If you monitor certain investment strategies for a while then you will soon get an idea of what is typical and how far up or down a specific trend can take your stock or commodity.  Try only to focus on one strategy at a time, rather than learn them all at once – concentrating on one at a time will help you to become a more well rounded investor who will end up minimizing his or her losses.  Above all, make sure that you know your numbers inside and out – fundamentally, your own research is the key to success rather than simply copying somebody else’s strategies and schemes.

Use Online Brokerage Accounts to Practice Trading in Gold Stocks

If you are thinking about trying your hand at gold stocks then you can get up and running quite quickly.  The best way to do this is to open a new brokerage account online – they will also have tools to their subscribers that help you do your own research as well as case studies and examples.

Some of the best online brokerage firms and systems will have an option to let you simulate trading which is one way that you can start to figure it all out and learn the ropes.  In other words, they will let you gain invaluable practice with pretend money until you’re ready to go and jump off at the deep end.

Investing in Futures Can Be Risky… But Offers Larger Profit Opportunities

If you are set on investing in futures then you need to accept that you will be taking some serious risks.  With bigger risk though, you have the best chance to make larger and more impressive profit numbers.  One thing I would say, is that you need to spread your risk a little bit, and cover your risk as best you can to minimize major losses – especially during the early days of trading when you are just starting out.

Minimize Your Risk with Options Trading

Options and option trading is one of the better best methods in which you can make money whilst capitalizing on any volatility that might in the market at that time. The best thing about options trading is that you can minimize your risk and losses.

Conclusion on Successful Investment Strategies

These are just some of the ways in which you can start to make some serious money whilst training in precious metal.  With some practice and experience, over time  you will understand how to take bigger risks, make bigger plays, and cement your independent financial future.  One last thing to remember: Always do your own research so that you limit your losses and know when to cash in!

Article Credit: Thanks to the team at WallStreetSubscriptions.com.  They offer advice and reviews on investment newsletters and have recently reviewed the MarketWatch Options Trader newsletter which is edited by Lawrence G. McMillan.  You can also find a recent interview with him on the website if you want to gain an insight into how the experts are making a success of Options Trading strategies in 2012.

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